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Quality-Based Medicare Payments: Will They Kill Private Practice?

It’s the holy grail of physician payment reform: ending fee-for-service payments to doctors and, instead, pay doctors based on the quality of care they perform. Remarkably, Congress feels they’ve found the answer:

Thus, the new language in the Senate Finance bill would finally connect Medicare reimbursements to quality, as opposed to volume.

The measure gives the secretary of Health and Human Services, working with the Centers for Medicare and Medicaid Services, the power to develop quality measurements and a payment structure that would be based on quality of care relative to the cost of care. The secretary would have to account for variables that include geographic variations, demographic characteristics of a region, and the baseline health status of a given provider’s Medicare beneficiaries.

The secretary would also be required to account for special conditions of providers in rural and underserved communities.

Additionally, the quality assessments would be done on a group-practice level, as opposed to a statewide level. Thus, the amendment would reward physicians who deliver quality health care even if they are in a relatively low quality region.

The secretary of Health and Human Services would begin to implement the new payment structure in 2015. By 2017, all physician payments would need to be based on quality.

Wow. That sounds great! But there’s just one problem…

… how do we define “quality?”

Medicare has historically withheld payments to physicians unless they performed lock-step “
quality measures” before granting release of the remainder of 1.5 percent of the doctors’ payments that were billed. Needless to say, this model has been an abysmal failure (subscription) at improving the “quality” of care delivered and has been very expensive to implement. Further, others have noted the challenge of measuring quality on the basis of clinical outcomes.

But this has not dissuaded our legislators from forcing the “quality issue.” No, they have proposed to find a fix by the creation of a hugely expensive C.M.S. Innovations Center:

“It would be funded with $10 billion over the next several years to implement pilot projects and demonstrations to promote new payment reform opportunities. There are quite a few problems with the bill, but this provision is truly visionary. The House legislation, HR 3200, mentions payment reform, but it [provides] only modest funding of $275 million. That’s not enough.

I suppose $10 billion compared to $275 million is “truly visionary” if you stand to receive the funds. One wonders what the tax payers will get at the end of the day for this grotesque amount of money.

Perhaps I’m too cynical, but I think the subliminal message coming from Washington so far is really this: doctors should be happy becoming salaried employees of larger health systems. This way, the government can pay the health system a bundled fee and the doctors can fight for their share of the kitty.

So far, this seems to be how the government will envision “quality” at an affordable price in the years to come.

I just wonder how many doctors will stick around to find out.


*This blog post was originally published at Dr. Wes*

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